Critical Issues Facing the USA:There are several critical issues facing this country concerning our ENERGY NEEDS.

Issue Number One: America needs more production from its domestic oil and gas reserves in order to forestall additional increases in, and further reliance on, dependence on foreign oil and gas imports. Imported oil now is over 60% of our daily use in this country.Issue Number Two: America's 650,000 oil and gas "stripper wells" represent the fastest and most dependable source to increase production. On average, they produce over 25% of the oil (29% in 2001!) and 8% of the natural gas used daily in this country.Issue Number Three: There is a huge amount of "sour" natural gas that can be produced and treated to produce a higher quality natural gas. "Sour gas" is so called because it contains hydrogen sulfide. Sour gas is present in four large oil and natural gas formations in Texas. Approximately 13% of all natural gas reserves in the U.S. may be prone to hydrogen sulfide contamination. The demand for increased production for this abundant sour gas will grow significantly in the future.Issue Number Four: Natural gas is the fuel of choice for the future. Yet, trillions of cubic feet of gas in Texas alone could be lost through well-abandonment by 2010 if someone, does not acquire and restore marginal gas wells. This is a huge resource; it should not be wasted.

STRIPPER WELLS: WHY BOTHER?

American energy is increasingly supplied by what we call marginal oil and natural gas wells, also known as "stripper wells" (wells that produce less than 15 barrels of oil per day or less than 60 thousand cubic feet of natural gas per day).Each barrel of oil and each MCF of gas produced domestically adds to the economic vitality of the United States, reduces energy dependency and keeps dollars from flowing abroad. It also produces considerable tax revenue to states, counties and localities. In 2001, production from stripper wells had a market value of $12.7 billion.There remain some 300 billion barrels of oil in the United States today. If only 10% of this oil could be recovered through new recovery methods, such as the ones AEDC offers, it would make a huge difference to this country. For example, even the most aggressive estimates of the oil in the Artic Wildlife Refuge are about 10 billion barrels. And, if we started drilling today, we would not see any oil for almost 10 years. Stripper wells, by contrast, already exist, have proven production histories, production equipment, and transportation facilities in place. Why wouldn't you elect to exploit that capability now?Twenty-eight (28) states have stripper oil wells. Texas, Oklahoma, Kansas and Ohio are the four with the largest number. Texas, alone, has slightly over 126,000 stripper oil wells.Twenty-eight (28) states have stripper gas wells. West Virginia, Pennsylvania, Ohio and Texas are the four with the largest number. West Virginia has over 36,000 such wells; Texas has over 29,000 stripper gas wells. In 2004, Texas totals over 14,000 abandoned, orphan wells according to the Texas Railroad Commission published report. The cumulative impact of stripper well production plays a significant role in the U.S. economy. In the last ten years, 4.3 billion barrels of oil equivalent has been achieved from these marginal producers. By contrast, the stripper wells abandoned and lost during this same time cost more than 22,000 jobs and $4 billion in economic activity.Most people do not know that you can't just turn an oil well on and off . One-sixth of our natural gas production comes from associated oil production. If you lose one, you lose the other. In the last ten years, over 175,000 oil and gas wells have been abandoned or plugged. The American oil and gas industry has a vital interest in maintaining and enhancing the production of these stripper wells. To that end, the industry and the Department of Energy have a number of studies under way at universities and laboratories around the country. Here in Texas, the Southwest Research Institute in San Antonio and the Petroleum Engineering Departments at the University of Houston and Texas A&M University all have received DOE grants for studies of enhanced oil and gas recovery methods. Louisiana State University and the University of Oklahoma have also received major grants to study enhanced oil and gas recovery. These are important matters for our domestic energy industry and our national welfare.Nearly two out of every three barrels of oil ever discovered in the United States still remain trapped underground after conventional recovery operations. This staggering amount of remaining oil-approximately 200 billion barrels-can be one of America's best hopes for greater energy security.